Standard Chartered Hong Kong SME Leading Business Index fell to 42.8, with only the real estate sector rising slightly by 0.8 points.

The Hong Kong Productivity Council announced that the first quarter of this year, the Standard Chartered Hong Kong Small and Medium Enterprise Leading Composite Business Index was 42.8, a decrease of 2.9 points from the previous quarter, falling to the level of the third quarter of last year. This reflects that under the uncertain global economic outlook, the overall business confidence of small and medium enterprises is becoming more conservative. In terms of the industry composite business index, out of the 11 industries, except for the real estate industry which increased by 0.8 points, the remaining 10 industries all declined, with manufacturing, transportation, warehousing and courier services, construction, accommodation and catering services, and import and export trade and wholesale industry experiencing the largest declines. Among the five sub-indices of the composite business index, three recorded declines, with "global economy" falling by 6.6 points to 29.6, "profit performance" declining by 6.4 points to 35.5, and "business situation" dropping by 6.4 points to 37.9. "Recruitment intention" and "investment intention" increased by 0.2 points and 0.7 points, respectively, to 50.8 and 49.6. 38% of small and medium enterprises indicated that their business confidence was affected by the change in the US presidency, with 62% concerned about the possibility of new tariffs on imported goods by the US, and 59% concerned about changes in the economic environment. Facing the potential changes in the business environment in the future, 71% of the surveyed small and medium enterprises stated that they would deploy different strategies to address potential risks, including exploring more diverse suppliers, enhancing employee knowledge and skills, and expanding into new markets. In terms of investment trends, 93% of the surveyed small and medium enterprises stated that they will maintain or increase their investments in this quarter, the same as the previous quarter. The most common investment projects are related to "training in e-commerce or digital technology", "information technology systems", "research and development projects" and "online market promotion". Regarding costs, the percentage of small and medium enterprises expecting an increase in raw material costs and employee salaries this quarter increased by 7 and 8 percentage points, respectively, to 57% and 27%, returning to the level of the third quarter of last year. This reflects that small and medium enterprises will face pressure from rising costs again. At the same time, 20% of small and medium enterprises plan to increase product or service prices, up by 4 percentage points from the previous quarter.